The Entrepreneur Betting on the Energy Transitions as a Big Money Opportunity

This week, GridDuck sits down with Superowner founder and entrepreneur, Philippe Le Fort to discuss all things energy, net zero and investment.

The energy transition needs an unprecedented coalition of committed actors and capital. But in commercial real estate, property owners see it as a huge financial cost to upgrade buildings. Moreover, that often is seen to benefit the tenants more than it does the owner, otherwise known as the split incentive problem.

Yet 85% of the buildings that will exist in 2050 – the deadline for the UK to reach net zero – have already been built and they’re responsible for circa 30% of operational carbon emissions. Entrepreneur Philippe Le Fort believes that real estate decarbonization is poorly understood, too slow and has no clear value creation – but he’s betting big on a new solution: a business to establish clear and profitable net zero pathways for building retrofits.

GridDuck spoke to Philippe about his vision to turn asset owners into impact-making ‘superowners’ and why he’s remaining optimistic about our future, even in the face of setbacks. These are edited excerpts of the conversation.

Philippe Le Fort

The energy transition needs an unprecedented coalition of committed actors and capital. But in commercial real estate, property owners see it as a huge financial cost to upgrade buildings. Moreover, that often is seen to benefit the tenants more than it does the owner, otherwise known as the split incentive problem. Yet 85% of the buildings that will exist in 2050 – the deadline for the UK to reach net zero – have already been built and they’re responsible for circa 30% of operational carbon emissions. Entrepreneur Philippe Le Fort believes that real estate decarbonization is poorly understood, too slow and has no clear value creation – but he’s betting big on a new solution: a business to establish clear and profitable net zero pathways for building retrofits.

GridDuck spoke to Philippe about his vision to turn asset owners into impact-making ‘superowners’ and why he’s remaining optimistic about our future, even in the face of setbacks. These are edited excerpts of the conversation. 

What compelled you to start Superowner? 

I wanted to build something big and meaningful that can really help make this world a better place. Real estate is responsible for 40% of carbon emissions. That’s a very big number. I used to tell people in my previous job that real estate is the next oil – people will look at us like they look at the oil companies. I saw the regulatory landscape changing in Europe about 15 months ago; people are going to have to upgrade their buildings. If you look at decarbonizing, the technology exists. It’s not like transport where biofuels are not commercially viable yet – if you want to make a net zero building wherever you are today, it’s possible and without a major green premium. 

What do you think is holding people back from seeing things like you do?

For the UK, it’s a new topic because there isn’t a big culture of energy efficiency and retrofits. The other thing is that it can be a fairly complex domain. We are not trying to send rockets to the moon or to make cars drive by themselves – it’s much simpler than that – but the way the industry has operated traditionally is very manual. The real estate and construction industries have one of the lowest digitalization rates in the world and there is a lot of catching up and education to do. 

You’ve said it’s not a technical problem but an economics problem. Why?

It’s about making people understand how they can have profitable, net zero pathways when upgrading infrastructure – and that’s what Superowner does. We take the technical data provided by consultants, engineers, tech companies and potentially a business like GridDuck so that the people who manage or own buildings can see financial viability. If you want to make good decisions you need good data. If you don't have good data, you are just putting your finger in the air and that doesn’t get you very far. In the UK, the rate of retrofits needs to be 10x higher.

Superowner Dashboard

You see yourself as a bridge between the tech and finance worlds – how? 

Our value proposition is that we enable the technical world, the GridDucks of this world, to translate their value proposition into clear financial terms so that they can talk to their clients, the fund manager or the CFO, in a language they will understand. The value chain in real estate is quite complex. No one understands kilowatt hours, no one understands what a tonne of CO2 means, but everyone understands what a dollar is. We are empowering the value chain to make decisions faster. If there is one overarching goal for Superowner it’s to fasttrack the capitalization process, to accelerate it. 

A distinction is that you’re not helping clients understand the financial cost of doing nothing, but helping them understand the financial benefit of doing it.

Consultant engineers tell me that 80% of their reports end up in a drawer because their clients don’t want to pay for it. They want it to go away. But if I tell you, ‘Okay, you can do this thing, it’s quite painful but you can make £2.5m profit out of it’, you might think, ‘this is interesting.’ It’s about changing the narrative, it’s about making the world see that they can make money out of the transition. 

How does data help potential clients see the benefits, such as asset managers?

Every asset manager might have specific metrics they want to look at, like the rate of return. It will depend on how you are looking at those metrics and how you are used to making your decisions. We are just here to facilitate data processing and visualization. Our technical data comes from third-party partners and we use proprietary data, external datasets about the future of energy prices, cost benchmarking and energy efficiency benchmarking to see how a project compares to a peer group. 

Some of the pushback you get is that the benefit for asset owners is not entirely direct. 
 
When we advise businesses the problem they have is that, ‘Oh, we’re going to spend Y but our customers or tenants will benefit from it and we’re not going to see any value directly.’ That’s the split incentive problem. The other problem is that it appears to be costly without any clear path of return on investment and then I would say it’s a complex topic. People are not really equipped to deal with it, and these are the problems we are trying to solve.

Do you feel that ultimately much of this debate does come down to money? 

One of the biggest questions about the energy transition is who will pay for it. That’s a very big question and that’s an underlying question in every decision. That’s what we are trying to help people with: here is the cost and how do we make it so that we can share the cost across all the stakeholders, the current owner, the future owner, the tenants, the government, the banks and so on – so that it creates value for everyone. 

Despite slow progress, do you feel that the 2050 goal is achievable?

When you do what I do you have to be an optimistic person. You have to believe that the way the world is going to be tomorrow can be very different from what it is today. If I didn't think it was possible I wouldn't be doing what I do. Despite the fact that I am an entrepreneur I would say that I am quite a low-risk person. I have a background in finance and I understand risk and quantifying, and I am very careful about the decisions I make, so if I didn’t think I had a reasonable chance to win this I wouldn’t be doing it. 

You started your career as an architect. Has it been a long journey to get here?

When I became an architect, I realised that the people calling the shots and having a real impact were either the financial people or the politicians – and I didn’t want to be a politician. I was living in Zurich; Switzerland is a really small place, and I needed to see the world. I worked as an investment director for [US real estate and investments company] Tishman Speyer in London. I then moved on to build a tech business for Patrizia, one of the largest investment managers in Europe. But I always had the calling to build my own business and, with more regulatory certainty and improving economics, it felt like the right time to do it.  

Philippe Le Fort is the founder of Superowner, an early-stage venture developing software to improve decision-making and simplify financing of real estate decarbonization at scale.

GridDuck is a B2B energy management system – a complete solution for gas, water and electricity sub-metering and automation.